And how they can turn it around…
The L.A. port: It’s a sad story of lost opportunity.
The Port of Los Angeles should be booming…sparking an explosion of jobs, income growth and business opportunity in the South Bay, L.A. County and beyond.
Instead, in 2013, fully-loaded containers are off by 6% and exports are down by 11%.
And it’s about to get worse. Why?
Two years ago, I warned that…
* Political corruption…
* Liberal economic policies…
* And taxes and fees…
…would destroy any advantage the Port of Los Angeles had over other ports. And now, with new competition coming, the Port is looking like it’s in for a dismal future.
So what’s killing the goose that laid the golden eggs? Here are five key things that must be reversed to save jobs and create jobs:
1. Political corruption
The Port has a bloated bureaucracy: Mostly political appointees with high-paying jobs–for little amounts of work. The number of employees at the Port has increased by 2/3 while the volume of loaded imports remains stagnant.
At the executive level, political payoff appointments have tripled–equaling millions of wasted dollars.
This bureaucracy must be cleared out. And the truly inept harbor commissioners must be replaced with executive directors who understand the industry. The political corruption that exists must be replaced.
2. Job-killing regulations
The L.A. Port’s regulations, compared with regulations of competing ports, are directly and indirectly killing the Port’s competitive advantage. The State and County regulations must be reduced and reasonable.
Also, the political/union strong-arm tactics must stop. Take, for example, the attack on independent truckers and the trucking industry over the “company employee” provision of the “Clean Truck Program.” It only made independent trucking uncompetitive.
3. Taxes and fees
The Port of Los Angeles is pricing itself out of the competitive market.
4. Business-unfriendly Port
The Port must stop giving up significant advantages over other ports. And the market must be business-friendly. Right now, California has more rigorous environmental standards than most other states. Put that together with the slow highways and hiked-up land prices, and you have business running away.
Not only should we lower taxes and regulations that make for a high-cost, an unfriendly and unacceptable business environment…but we also have to:
- Establish policies that will prevent shutdowns because of work stoppages.
- Stop targeted attacks on businesses, such as Walmart. They are the nation’s largest importer, but they have diverted most of their shipping to other ports because of L.A.’s anti-business procedure.
5. Not being prepared for new competition
Ten years ago, Los Angeles and Long Beach received more than 56% of the imports from the Pacific Rim. Now it’s down to 48% and continues to decline. Of the cargo unloaded there, 40% could easily be offloaded elsewhere.
Canada, Mexico and Panama are on the move. They’re all trying to take business away from L.A.
So it’s no wonder the L.A. Port is scrambling to figure out how to survive. Here are just two things that are coming their way:
- The expansion of the Panama Canal in 2015 will make for monumental change in global shipping.
- Maersk shipping lines is the world’s largest shipping company. But instead of investing in L.A., they are pouring $300 million into expanding in Mexico because they can’t work with the Port of Los Angeles.
As the situation grows worse, the politicians are ignoring the problems.
Business leaves. Jobs are lost. On top of that, the new business is going elsewhere–somewhere that has fewer problems and lower costs.
You may have seen the exposé on the multimillion-dollar cost overrun on the Angelena II, the ridiculous PR effort for the well-connected. Just add to this millions of dollars for failed investments, plush executive offices, junkets, wasteful conferences and more. See the 4-minute video here.
Respected journalist Chris Blatchford of KTTV just did a report this week on a project that went over budget by more than $250 million. What a travesty. See the 2-minute exposé here.
It’s time to change.
Thoughts on the Port of L.A. or the upcoming change in global shipping? Email me at [email protected].